The Consumer’s Summer Spending Surge

June 2026 Consumer Spending Performance

• Aggregate credit and debit card spending rose 6.3% year-over-year, the strongest growth rate in four years.
• Monthly spending increased 0.6%, driven primarily by a surge in discretionary sectors rather than necessities.
• Necessity spending declined across income cohorts, attributed to easing gasoline price pressures despite year-over-year costs remaining up over 20%.
• Discretionary services growth accelerated, with airline and leisure spending both up over 10%.
• Retail spending showed signs of broadening, with clothing up 7% and general merchandise up 5%.

2026 FIFA World Cup Economic Impact

• Total card spending jumped from approximately 5% to 6% year-over-year coinciding with the tournament start on June 9.
• Food and drink spending specifically rose by 1.7 percentage points following the tournament launch.
• Host cities experienced a significant spike in restaurant spending (up 6% YoY after the tournament began vs. +3% previously), compared to a marginal 0.3% boost in non-host areas.
• While foreign tourist impacts were likely positive, Bank of America's proprietary data is U.S.-domestic and cannot isolate international visitor spending.
• The spending surge is compounded by early online retail promotions, which shifted typical July sales activity into June.

Convergence of the K-Shaped Economic Recovery

• The spending gap between high-income and lower-income households narrowed in June, reaching its tightest point since May 2025.
• High-income spending growth remained solid at 5.8%, while lower-income spending growth accelerated from 4.0% in May to 1.8% in June.
• Middle-income spending growth converged toward lower-income levels, though it remains in an upward trajectory.
• Despite the narrow gap, the top 10% of households by income still account for discretionary spending roughly seven times that of lower-income households.

Drivers of Lower-Income Spending and Wage Growth

• After-tax wage growth for lower-income households accelerated to 4.1% in June, up from 1.0% in January, effectively closing the wage gap with higher-income earners.
• Lower-income consumers in host cities drove a disproportionate share of spending growth, with restaurant spending up over 8% year-over-year.
• Job-to-job transitions among lower-income households, which typically yield raises exceeding 10%, appear to be a key structural driver of wage convergence.
• Potential contributing factors include reduced tax withholdings at the start of the fiscal year and general labor market acceleration.

Labor Market Insights

• Bank of America's account-based payroll data indicates a 1.7% year-over-year acceleration in jobs growth through June, exceeding BLS reported rates.
• Job growth accelerated across both host cities and non-host cities, suggesting the broader labor market strength is not solely a function of World Cup hiring.
• The acceleration in job-to-job moves signals potential for sustained narrowing of the income K-shape, as younger workers switching jobs command larger raises.

Outlook and Risks

• Spending growth is expected to decelerate in the near term as World Cup-related demand and early online promotion effects drop out of year-over-year comparisons.
• Headroom for growth is thinner in the second half of 2026 compared to the first, as tax refunds and the tournament are exhausted.
• Household spending outpaced wage growth across all income cohorts in June, leading to a decline in the personal savings rate to approximately 2.7%.
• Persistent reliance on savings for consumption suggests underlying tensions, though the labor market remains solid enough to support broader Fed rate hikes.